periodic interest payment that the

bondholder receives during the

time
between purchase date and
maturity date; usually received
semi-annually.

Bond Coupon Rate

interest-bearing security which

promises to pay (1) a stated amount
the rate per coupon payment
of money on the maturity date, and
Coupon period; denoted by r
(2) regular interest payments
called coupons.

Coupon
 the price of the bond at If P = F, the bond is purchased
purchase time; denoted by P at par. 1

Per Value/Face Value

If P < F, the bond is purchased
at a discount. 2

the amount payable on the

If P > F, the bond is purchased
maturity date; denoted by
at premium. 3
F

Price of a Bond
 present value of all cash inflows to
the bondholder.

Term of a Bond

fixed period of time (in years) at

which the bond is redeemable
as stated in the bond certificate;
number of years from time of
purchase to
maturity date.

Fair Price of a Bond